Livret A: rate could be raised in 2022

Locked in at the floor rate of 0.5% since February 2020, the Livret A interest rate could be raised in 2022, due to inflation. We'll have to wait until mid-January to find out the decision of the Ministry of the Economy and Finance, for possible application from February 1.

Rapidly rising inflation

Inflation has been rising steadily for several months now. The rise from 1.8% in August to 2.1% in September and 2.6% in October, according to Insee figures. While the government has decided to make a gesture in favor of purchasing power, by introducing a 100-euro inflation allowance for 38 million French people, it will soon have to decide whether to raise the interest rate on the Livret A passbook savings account.

At the end of September, French Finance Minister Bruno Le Maire told France Info that there was " no question of changing the Livret A interest rate " for the time being. In his view, the rise in inflation was temporary, justified by the economic recovery.

Nevertheless, he assured us that an update would be made in November, and that a decision would be taken depending on the situation. " I had announced that, as inflation was high, there would be an automatic increase in the minimum wage. That's what happened. Wait a month before you see what will happen to the Livret A ", he explained at the time.

Livret A interest rate could rise to 0.8

While a possible increase in the Livret A interest rate cannot in any case be applied before February 1, 2022, two weeks after the Banque de France's calculation, the Ministry of the Economy and Finance will have to make a decision in the coming weeks.

Since February 2020, the date of application of the reform of the calculation method decided in 2018, the Livret A interest rate has been calculated from the average of the inflation rate over the last 6 months, and the short-term interbank rate. The floor rate is 0.5%, i.e. the current rate.

Based on inflation, which has risen from 1.1% to 2.6% since July, its half-yearly average should exceed 2% in January. If the interbank rate is also taken into account, the Livret A rate could rise to 0.8% in February 2022.

However, the decision expected from the Ministry of the Economy and Finance is highly political in this election period. It seems difficult to justify a status quo just a few months before the presidential elections, especially since the Livret A, a very popular savings account, saw its outstandings soar during the health crisis.

Total deposits in Livret A and Livret de développement durable et solidaire savings accounts stood at 472.4 billion euros at the end of September. Since the beginning of 2021, the French have invested a total of no less than 20.64 billion. Despite this popularity, Bercy's reluctance to increase the interest rate on the Livret A is motivated by a desire not to curb consumption, which is essential to economic recovery.